Tuesday, October 2, 2012

The 10-Year Life Cycle of a New York Consequential Damages Claim

Who out there other than I remembers this case and the position it forever occupies in the evolutionary chain of the recoverability of consequential damages against property insurers in New York State? Those who do might understand then why I am blogging about a one-line decision.

Vivian Stern made a claim to The Charter Oak Fire Insurance Company (Travelers) for losses stemming from an armed robbery that occurred at her jewelry store on or before December 28, 2001. For reasons not apparent in the 13 (!) reported decisions of the Fourth Department in this case (most regarding motion practice), a dispute arose between the parties and Stern sued Charter Oak in 2002 for both contractual damages and consequential damages, including future lost profits and future sale value of the business.

In September 2005, Charter Oak moved to dismiss the complaint's consequential damages claim arguing, among other things, that coverage for such damages was negated by the policy's consequential loss exclusion. Onondaga County Supreme Court (Deborah H. Karalunas, J.) granted that motion and plaintiff appealed.

So what's a robbed jewelry store owner to do under those circumstances? Make a motion to renew the motion that resulting in the adverse order based on a change in the law, of course. Unfortunately, plaintiff made such a motion to the Appellate Division, which in July 2008denied her motion and referred her back to Supreme Court with the instruction that "[i]f [she was] is aggrieved by an order of Supreme Court, plaintiff's remedy is an appeal to this Court from that order."

The order to which the Appellate Division was referring was one apparently granted by Supreme Court Justice Karalunas on May 5, 2008, which had denied plaintiff's Bi-Economy-based motion to renew her opposition to Charter Oak's original motion to dismiss plaintiff's consequential damages claim based on the doctrine of "law of the case", which essentially is a "because I already said no" legal doctrine that courts sometimes apply when litigants want a do-over.

So plaintiff appealed that order back to the Appellate Division, Fourth Department, and in February 2009 that court, in light of the intervening opinion of the Court of Appeals in Bi-Economy, modified the order appealed from to grant plaintiff's motion to renew her opposition to Charter Oak's original motion and then, on such renewal, denied Charter Oak's motion to dismiss and reinstated the plaintiff's consequential damages claim:

While the instant action remained pending, plaintiff moved, inter alia, for leave to renew her opposition to Charter Oak's motion to
dismiss her claim for consequential damages, based upon the decisions of
the Court of Appeals in Bi-Economy Mkt., Inc. and Panasia Estates, Inc. Supreme Court erred in denying that part of plaintiff's motion for
leave to renew with respect to consequential damages based upon the
doctrine of law of the case and instead should have granted leave to
renew and, upon renewal, denied Charter Oak's motion. "[A] court of
original jurisdiction may entertain a motion to renew or [to] vacate a
prior order or judgment even after an appellate court has rendered a
decision on that order or judgment" (Tishman Constr. Corp. ofN.Y. v City of New York, 280 AD2d 374, 377 [2001]).
Furthermore, we conclude that, because "the analysis employed by this
[C]ourt in the prior appeal no longer reflects the current state of the law, the doctrine of law of the case should not be invoked to preclude
reconsideration of" Charter Oak's motion to dismiss plaintiff's claim
for compensatory damages (Szajna v Rand, 131 AD2d 840, 840 [1987]; see Foley v Roche, 86 AD2d 887 [1982],lv denied56 NY2d 507 [1982]). We therefore modify the order accordingly.

Rearmed with her complaint's consequential damages claims, plaintiff went back to Supreme Court where in late 2009 or early 2010 the parties moved and cross-moved for summary judgment. As best as can be discerned from the limited information available on eCourts, those motions resulted in a November 18, 2010 order denying plaintiff's subsequent motion to correct the motion record and holding that: (1) Charter Oak had breached the
insurance policy; (2) that the plaintiff's alleged business failure (aka consequential damages) was not
proximately caused by that breach; and (3) that plaintiff was entitled to
money damages of $7,887.19, plus interest. That's right -- $7,900. The printing costs already expended in the two previous trips to the Fourth Department had to cost more than the award amount.

Apparently having never heard of throwing good money after bad, or perhaps having unlimited resources to file and respond to six (!) more appellate motions prior to perfecting an appeal (five for filing extensions and one pro hac vice admission of new appellate counsel for Charter Oak), coupled with the fact that a relative of some kind assumed lead counsel responsibilities for her, plaintiff appealed Supreme Court's order denying her consequential damages and awarding her only $7,887.19 in contractual damages, plus interest.

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